Cemex Holdings Plans To Spend $37 Million For Expansion, Raise Funds From IPO To Pay Debts

A concrete mixer truck of Mexican cement maker CEMEX, is seen at a concrete plant in Monterrey February 24, 2015.
REUTERS/Daniel Becerril

Cemex Holdings Philippines Inc., (CHP) will spend $300 million (P14.04 billion) until 2019 to double the capacity of its production. Aside from that, CHP also plans to raise funds from its Initial Public Offering (IPO) to settle debt incurred during the acquisition of its operating subsidiaries.

Vincent Paul O. Piedad, Cemex director for the Philippines and Asia said that the company intends to spend $37 million (P1.73 billion) in 2016 to expand production capacity in its Antipolo plant.

“This is part of the $300 million, so it is going to be staggered from this year to 2019,” Business World reported Piedad as saying.

Currently, the cement manufacturer’s Solid Plant in Antipolo has a capacity of 1.9 million MT (metric tons). It is expected to increase to 3.4 million MT by 2019. This would bring Cemex Holdings’ total capacity from 5.7 million MT to 7.2 million MT.

In 2015, the firm spent P1.05 billion, with P907 million used for maintenance, P72 million for growth and other items and P68 million for the expansion of its APO plant in Cebu.

CHP is set to start its P25.1-billion IPO on Monday after it announced its price offering on Thursday, June 30.

“We are delighted by the strong participation that we have received from institutional investors for our IPO notwithstanding events in Europe,” Cemex cited Pedro Jose Palomino, CHP Chairman and President, as saying in a press release statement.

“We take this as a sign of the investors’ confidence in the long-term prospects of CHP and, more importantly, the Philippines as a whole,” he added.

Proceeds from the IPO will repay $504 million of the company’s short-term loan which was incurred in connection with acquiring its operating subsidiaries Solid Cement Corp. and Apo Cement Corp.

“The shares are expected to begin trading on the Philippine Stock Exchange on July 18, 2016 under the ticker symbol “CHP,”” the company said.

Alex Tiu, AB Capital Securities analyst, said that the outlook for cement is good especially because President Rodrigo Duterte is eyeing to boost infrastructure spending.

The Philippine Stock Exchange index (PSEi) rallied to a 13-month high on Tuesday, as the incoming Duterte administration held talks in Davao with the business community. The boost is also from the fading worries about the British Exit (British Exit) from the European Union (EU), which will be decided after the June 23 referendum.

Uncertainty looms around global markets as oil prices slip Monday due to an increase in the number of rigs from West Texas Intermediate. Adding to the worry is the possible exit of Britain from the European Union (EU).